Smaller shareholders are also refusing to accept and an action group argues that the company is being hijacked on the cheap.

Clipserver shares were 80p a year ago. Rebels are angered because Xtreme's bid came only weeks after Clipserver chief executive Gary Forrest told institutions-that it was doing well, lifting revenue from £3.6m last year to £4.5m in 2001.

It had £3.9m left of the £6.75m raised when it moved from Ofex to the Aim market with a float at 70p in May 2000.

Herald chief executive Katie Potts said: 'There has to be an explanation for the difference in price between the bid and what we were told in August, but I don't know what it is.'

There is muttering about stock being dumped on the market, forcing the price down. The shares are currently 29 1/2p.

Forrest says the offer was 7% above the then share price, reflected Clipserver's value and should be seen against the conditions prevailing after September 11.

He says owners of 42% of Clipserver made irrevocable acceptances, a further 7% said they would accept, and Xtreme has bought 29.7%.

Some rebels accuse Clipserver chairman Roger Williams of concealing his past as a vice-president of Boesky Corporation. Ivan Boesky went to jail in 1989, having made more than $100m from insider trading.

Although Williams did not reveal his Boesky link in Clipserver's documentation, Forrest says his chairman was open about it with their advisers when Clipserver moved to Aim.

The Financial Services Act says there is no obligation to reveal interests stretching back beyond five years.